What Will the Automatic Stay Do For Me When I File for Bankruptcy?

Considering bankruptcy and conducting initial research into the consumer bankruptcy process will likely result in your discovery of information about the “automatic stay” and just how important it is in any consumer bankruptcy case. Yet you might be confused and wondering: what is the automatic stay, and what will it do for me when I file for bankruptcy? In short, the automatic stay is an injunction that will apply as soon as you file your bankruptcy petition. Injunctions are legal tools that are used to stop parties from taking certain actions, and that is precisely what the automatic stay does for debtors who are going through a bankruptcy case.

Our experienced St. Petersburg bankruptcy lawyers are here to provide you with additional information and to help you understand your options when it comes to Chapter 7 and Chapter 13 bankruptcy.

Stops Creditors and Debt Collectors from Contacting You

 Once the automatic stay is in place, creditors and debt collectors cannot continue to contact you about your debts. They cannot make contact via email, text, phone, or other mode in order to try to get you to make a payment or to pay a debt that you owe in full. Once debts have been discharged in your bankruptcy case, creditors and debtors whose debts have been discharged also cannot continue to contact you in order to seek payment.

Prevents Creditors and Debt Collectors from Initiating New Debt Collection Actions Against You 

The automatic stay importantly prevents creditors and debt collectors from initiating any new debt collection actions against you during your bankruptcy case. What this means is that creditors and debt collectors cannot file lawsuits against you, initiate foreclosure actions, seek wage garnishments, or any other action aimed at collecting debt you owe.

Halts Ongoing Actions Against You to Recover Debts 

In addition to halting any new debt collection actions, the automatic stay also puts a stop to any ongoing actions against you to recover debts. Accordingly, if you are currently in the middle of a lawsuit filed against you by a creditor, for example, that case will not move forward during the bankruptcy process. Similarly, if your house is at any stage of the foreclosure process, the foreclosure process cannot continue while you are going through a bankruptcy case and the automatic stay applies.

Stops Foreclosure

 As we noted above, the automatic stay stops a foreclosure during a bankruptcy case, and it can have additional implications in a Chapter 13 bankruptcy. To be clear, in both Chapter 7 and Chapter 13 cases, the automatic stay will prevent a lender from initiating a foreclosure and will halt an ongoing foreclosure case. Yet in Chapter 13 cases, that function of the automatic stay, along with the repayment plan in a Chapter 13 bankruptcy, can allow the debtor to catch up on mortgage payments, avoid foreclosure, and remain in their home.

Contact a St. Petersburg Bankruptcy Attorney 

Consumer bankruptcy can be complicated and confusing, but it is important to remember that one of the experienced St. Petersburg bankruptcy attorneys at the Law Offices of Stephen Barszcz are here to help you. We routinely represent clients in the St. Petersburg area in Chapter 7 and Chapter 13 bankruptcy cases, and we can talk with you today to learn more about your financial circumstances and to discuss your options with you. Do not hesitate to contact us to learn more.

Source:

law.cornell.edu/uscode/text/11/362